tv Nightly Business Report PBS December 7, 2012 7:00pm-7:30pm PST
"n.b.r."! >> susie: the job market is proving to be surprisingly resilient. american employers hired 146,000 workers in november, much more than expected. and the unemployment rate fell to 7.7%, the lowest level since december of 2008. as erika miller reports, that wasn't the only surprise in today's report. >> reporter: almost no one on wall street saw this good news coming. there was every reason to think hiring would be weak last month. after all, many parts of the east coast are still recovering from devastation caused by superstorm sandy. >> i think the most likely explanation here is sandy's impact was significant but was so short-lived that it didn't extend to the sample period of the employment report which was the week that covered november 12. >> reporter: hiring was also supposed to be weak due to worries about the fiscal cliff. with $600 billion in automatic
tax hikes and government spending cuts set to start next year, why aren't more firms postponing hiring decisions? >> what we're hearing from businesses is that it is really hard to actually pull back hiring right now, because they've already fired so many workers, gotten so lean that it's really difficult. >> reporter: but not all the surprises in the report were good. at 7.7%, the unemployment rate hit its lowest level since december 2008. but that was mostly due to people giving up their search for work. and there's another disappointing trend, weak wage growth. >> what we are not seeing is strong income generation. the slowing in wage gains-- the weak bargaining power of labor comes across in this report and >> reporter: so although the labor market is not getting worse, it's not getting a lot better, either. and there are plenty of risks that could cause businesses to cancel projects, and hiring plans. >> clearly one of the biggest
risks is that we don't see a deal on the fiscal cliff, or that they drag it out over a number of months. and that that really erodes confidence. >> reporter: against that backdrop, the federal reserve is trying to do all it can to help the economy. the central bank is widely expected to announce an extension of its bond buying program when it meets next week. erika miller, "n.b.r.," new york. >> tom: with the fiscal cliff about three weeks away, washington hasn't made much progress to avoid it. that was the assessment from one of those directly involved: house speaker john boehner. the top republican today accused president obama of, "slow walking", the economy to the edge of the cliff. he repeated his call for the president to send congress a plan that can pass both houses of congress. tax rates are the major sticking point. the president wants to raise them for america's highest earners, house republicans strongly oppose: >> instead of reforming the tax code and cutting spending, the president wants to raise tax rates.
but even if the president got the tax rate hike that he wanted, understand that we would continue to see trillion dollar deficits for as far as the eye can see. washington's got a spending problem, not a revenue problem. >> tom: congress and the president have 24 days to reach a deal, before the fiscal cliff's tax hikes and spending cuts take effect. >> susie: mark zandi says "bad things will happen to the economy pretty fast" if lawmakers don't settle the fiscal cliff issue. he's chief economist of moody's analytics. so mark falling off the fiscal cliff means bad things. how bad? >> it could be quite bad, susie. i don't think it's if we get into january and we haven't settled this but if house makers haven't nailed this down by early february, i think stock investors, bond investors will start to get very very nervous, start selling, risky businesses pull back and by the end of february when we start
approaching the ceiling for the debt limit, i think we'll be back in recession. it will be a fairly severe recession. so policy makers have a few weeks but not much more than that. they have to get this together. >> susie: some people are saying that today's jobs report is very encouraging and that you can look at this as a way that maybe the economy can handle some stuff belt tightening because things are looking a little bit better. how do you think the various parties, republican and democrats will handle this jobs report in their fiscal cliff negotiations? >> well, you know, you're right. some folks look at this and say the economy's strong enough. it should be able to digest big tax increases spending cuts. others look at it and say look we still have a very high unemployment rate, a long way to go to get back to full employment. the economy can't tolerate big tax increases and spending cuts. most political debates the reality is in between. we do need to address our fiscal problem so we do need to go
through some spending cuts and we also need some tax revenue increases. but we have to phase it in over time, otherwise the economy will choke on that. we can't have too much restraint too quickly. so we have to phase this in, smooth it in to make it palpable for the economy. >> susie: until that happens, there is a lot of anxiety in the labor market. the big fear for many individuals and for investors is that companies are going to start laying off workers. we saw this week that cities have announced 11,000 job cuts, is this the beginning of a trend, mark. >> no, susie, i don't think so. if washington can reasonably address the fiscal issues and i'm still confident that they will ultimately get it together. there will be a fair amount of -- but at the end of the day they'll get it together. if they're able to do that when we get into next spring, i do think we're going into much better shape. businesses will get it back and certainly investor will be happy about that. by this time next year i think
we should see a much better job market because the housing whichs already starting to turn should be in full swing. so no, i don't think businesses are going to pull back. the only reason they would is if washington completely because this. at this point i don't think that's going to happen. >> susie: how do you think the federal reserve is going to read in today's jobs report. they're meeting on tuesday as you know. do you think it's going to trigger any new response from the fed? >> well, as you know the fed's on high alert. they've got their foot to the accelerator. they're using open ended buying bonds and they're going to up the ante i think at the next meeting in the coming week. operation twist ends and they're going to start rolling that into this quantitative even process. so a lot of bond purchases. i think they're going to continue to do that until unemployment is moving definitively lower and is much lower than it is today. and most importantly, they're going to wait and see how these things go in washington. they're very nervous that policy
makers aren't going to get this right. so as long as washington's bitter i think they're going to be in high alert. >> susie: thanks a lot mark, great talking about you. we've been speaking with mark zandi, analytic. >> tom: still ahead, slow job growth doesn't discourage tonight's "market monitor." mark luchini of janney montgomery scott tells us why. that upbeat job growth in november didn't lead to consumer cheer as december began. the reuters-university of michigan consumer sentiment survey fell in early december to its lowest level since august. the dow rose 81 points, the nasdaq was down 11 on further losses in apple shares, the s&p up four points. a mixed week for the indices, the dow industrials, which does not include apple, gained 1% for the week. with apple, the nasdaq fell 1.1%. and the s&p 500 eeked out a 0.01% gain since last friday.
>> susie: one hundred of the small businesses behind the job growth we're seeing, were honored last night in washington, with inc magazine's "hire power" awards. the businesses span the country, and cross an array of sectors. sylvia hall met with three of the winners to talk about their businesses, and the one thing they have in common: success. >> reporter: they work in different states, and in completely different fields. but together, these c.e.o.s have added more than 1,500 jobs to the nation's economy over the past three years. this is mike derheim, who heads
a minnesota tech firm; sharon virts mozer, whose virginia- based company runs administration for the federal government, and karl schledwitz of memphis, who's turned jerky and hot dogs into opportunity. seems to be i' kind of a mature business. how do you find growth there. >> the actual space is growing. there are snacks, beef jerky really started growing with the atkins diet craze. it's probably quadrupled in the last two years. we've been able to grow by buying under utilized manufacturing facilities and centralizing the back office and putting robust sales operation together filling up the plants. and that creates employment and creates more profitability. it's no different than an office building or a shopping center. if it's half empty it doesn't do very well cash flow wise but you take that same exact building and fill it up and it cash
flows. >> you work with the federal government. again, not exactly what one would consider a growth market. how have you been able to find growth. >> we found that the demand is going up to space and how the economy's going and the fact that people want to be here in the u.s. we've also found growth through process and our process takes what i call collaborative work forces methodology in a training program that allows them to accomplish great things. >> tell me just a little bit about this process. >> we hire typically high school graduates. and we bring them in and we assess their skills and their training and what they have to offer. we put them through a training program to train them towards a task or particular set of tasks. >> 100 nerves in 100 days. where did you get to the point where you were on this nerd drive. how did you get here and how is the drive going. >> we started in november with 100 nerds and 100 day modeled
after a pbs member drive. and the deal is that if you were known to us and you get an interview we send you a hundred bucks. if we end up hiring the person we send you another 400 bucks and we're trying to get to a hundred nerds in as many days. i think right now we've had about 900 applications submitted and we've hired 189 people. >people -- 189 people. >> what's the challenge for you specifically in hiring the people. >> the last i check the unemployment ratexd for i.t. people i'm looking for is something like half of the national average. so above all there just aren't enough people who are out there looking for jobs. >> i just wanted to open it up and ask if hiring is a challenge -- >> [indiscernible] as a result credit issues come up. so finding folks that have the right attitude with good credit particularly since we have a market or set of work force that
often times they are suffering in a poor economy and they do need those jobs but they have credit issues. that's our biggest challenge but for the most part, we have no problems in recruiting this particular market with unemployment as high as it's been. >> i wish we had that problem. we're exactly the opposite. we're struggling all the time to figure out new ways toqreplyina. just a different worker i guess but it's different. >> i wanted to go around and ask this about your growth prospects for the next year. >> we hope to have more acquisitions this year and continue to add to the plants that we're operating in. so i don't, without an acquisition, it would be 10-15% growth. >> we're looking to grow by at least 500 if not 600 jobs by the end of 2013. >> we are planning 25% a year revenue growth for 2013. so we're definitely planning continuing to grow aggressively
and organically. >> thank you all so much and congratulations on your awards. >> thank you. >> susie: calling it a robust investment in the region, the white house today said president obama would ask congress for $60.4 billion in aid for states impacted by hurricane sandy. still that was less than the $82 billion the states wanted for rebuilding. millions of homeowners and businesses that were in the path of hurricane sandy are waiting for checks as the long rebuilding effort begins. ruben ramirez spent a day with an insurance claim adjuster touring one of the hardest hit areas.
>> reporter: it's the calm after the storm. empty streets. houses ripped from foundations. boats sandwiched between homes. remnants of the famous jersey shore boardwalk. >> what makes this storm different is the large amounts of sand that it brought with it. that's how it was different than katrina. the sand is bad. >> reporter: karl new is one of about 30 claims adjuster's american modern insurance dispatched to new jersey, new york, and connecticut. for the barrier island off the coast of new jersey, it was north of the eye of the storm but think of it like a windmill spinning counter-clockwise. >> seaside was hit with a 37- foot wall wave so that a pretty big wall that was coming in so that a lot of power. that's crashing in here and all that force. it's brining sand. it's bringing all that water in. >> reporter: it wasn't until nearly a month later that insurance adjuster's were allowed on the island to asses the damage.
>> the "l" shape everything is going down from the weight of the sand that was pushing it and the water that was pushing it out. it pushed his neighbor's shed completely into the side of his house. he had 5 1/2 feet of water inside his house so everything on the first floor needs to be completely gutted. >> reporter: john marchetti's house sits just two doors closer to the beach. >> i do have homeowners insurance and flood. homeowners doesn't cover very much. everything from the sky is homeowners and everything from the bottom is flood. obviously everything here is flood. >> reporter: marchetti's insurer, n.j.m. will take a loss of more than $300 million from sandy, four times what it paid out from irene last year. industry estimates put the total amount of damage from superstorm sandy at $50 billion. insurance companies are expected to pick up between $10-$20
billion of that. that puts superstorm sandy at the top of the list ahead of hurricanes ike, ivan, and irene. monday we will look at why rebuilding from sandy is so expensive thanks to where she came ashore. ruben ramirez, seaside heights, new jersey. back here on wall street, tom, some interesting revolutions from netflix today saying it got a wells notice and being investigated by the securities and exchange commission. behind it is a very interesting debate going on. the reason for the investigation is that the ceo reid hastings had posted some information on his facebook page about developments at the company and the fec said you didn't disclose this property, should have been a press release or filing with the sec and raises new questions about social media and fair disclosure. >> tom: this is all about how technology is changing and regulations have a hard time susie keeping up with it. we see it with high frequency
trading for instance and how companies disseminate information using social media getting it out argue me to more people faster than what a traditional press release or sec filing. so we'll have to see how this one plays out. that stock did not move much today on the notice although we did have plenty other movement. let's get going with our market focus here. as we saw the influence of apple that it can have on the broad market really continue today. the jobs data helped the s&p 500 start in the green but the early gains disappeared as apple shares sank. the index was able to climb positive in the afternoon to finish up a 0.03%. trading volume slowed. 605 million on the big board. 1.6 billion on the nasdaq. the materials and financials gained 0.08%. the energy sector was up 0.07%. technology was the big drag, thanks once again to apple. over the past week apple has gone from almost $600 per share to $533, down about 9%. with the sell-off apple is about
$8 above its most recent low from mid-november. there are several theories behind apple's stock drop: profit taking, disappointment over no special dividend, and more fundamental concerns about its business growth. two other big techs under some pressure today. microsoft fell 1%. it's just pennies above its low for the year. cisco systems fell 0.07%. the firm repeated today its previous earnings growth forecast. big banks were on the upswing with the further improvement in the job market, and ahead of next week's federal reserve meeting as expectations build for more economic help. j.p. morgan jumped 2.6%, it's highest price since early november. bank of america added another 1.8% to an 18 month high. a big global energy deal is one step closer tonight. late today canada okayed the buyout of nexen energy by chinese energy giant c-nooc. this is a $15.3 billion deal, representing another foreign expansion of a chinese energy company.
canada's ministry of industry said c-nooc agreed to "free market principles." the buyout offer for nexen came in july. in today's regular session, nexen was heavily traded as they fell 6.6%. but after the canadian okay, they jumped more than 14.5% in extended hours trading, to almost $27 per share. u.s. and british regulators still have to approve the deal. two years ago google offered six billion to buy daily deal website group-on before it went public. group-on's market value is half that tonight and bloomberg reports there's take-over speculation. the stock jumped 23% today. volume more than doubled. some of the buying also could be from traders who sold short the stock to profit as it was falling. four of the top five most actively traded exchange traded products were higher. the lone hold-out was the nasdaq 100 tracking fund, which includes apple. the fund was down 0.06%. and that's tonight's "market focus."
tall tom dow growth is one reason tonight's market monitor thinks the economy will pick up speed next year and so will stocks. mark luschini back with us at janney montgomery scott. the job market we saw today improving in the last month but still slow, do you think it's going to pick up the pace of that improvement next year and why. >> well we do, tom. the fact of the matter is we've been seeing steady spectacular job growth for the better part of 2012. job growth averaging roughly 150,000 or so a month. we think on the back of an up tick on several factors here that we're looking forward to
improving in 2013, we could see a modicum of an up tick in job growth. >> tom: among those other improvements you see consumers paying down debt as beneficial to the economy. doesn't that lead to less demand, less consumer spending. >> we think it's bringing up their balance sheet. >> tom: which is a good thing. >> it is a good thing which will lead to a much healthier foundation upon which one can be built which is important in the economy. >> tom: where are we in the delunching cycle closer to the end. >> i think it's probably a 2015-16 phenomena but well off the peak in 2006. >> tom: businesses meantime are not necessarily de-leveraging they don't necessarily have to they have a lot of cash out there but they're not spending it. you think they're going to less loose some of that cash. we heard so much about the fiscal cliff and companies holding back. how are those two related. >> i think the fiscal cliff ultimately will be rendered into a fiscal slow. between now and then the uncertainty is paralyzing ceo companies from big to small.
you can see in the core capital goods orders which have basically fallen off in the last two quarters indicative of holding that business investment and hiring back which we think will change once we have some certainty brought into that equation. >> tom: finally housing which has shown remarkable stability in several markets but there's talk about limiting mortgage deductions with the fiscal cliff negotiations sometime next year. couldn't that impact the recovery? >> it could. obviously it might be relegated to more affluent households in terms on of the ability to do a deduction either in full or part. tend of the day there's a large household informq.rjz that's occur that's going to drive perspective homeowners into the market regardless. >> tom: let's get to the pic3sb here. you do like housing stocks with the home builders etf. what do you anticipate. they've had a nice run already. >> they've been terrific. >> tom: put new money to work. >> they've doubled or better and yes we would. they may be subject to profit taking but nonetheless we still think we're in the early innings of the house recovery. >> tom: you also like
technology. is this a play on your business investment expectations for next year. >> it is, if business wallets open up we expect the destination for some of that money to go towardsxd more productive enhancing tools and they've been under investing in technology now for several years. >> tom: what about that transition from the pc to lab tuesday and smart phones. does that concern you at all about traditional technology terms firms. >> it disa little bit. intel is intriguing and really the sweet spot of 12459. the fact of the matt it's making itself more into a tablet or smart phone. in the meantime they get paid an enormous dividend yield to wait tom tal.>> tom: you like dividd spoks, you like conocophillips and johnson & johnson. both of them in terms of the stock price appreciation up by single digits percentages. you still like them. >> pretty much. battleship companies good places to be in held care and energy and again a very handsome yew is going to matter in total return. >> reporter: our mark luschini he's with janney memorandum girmontgomery.
>> susie: and finally tonight, it's often said that in life, it's not the destination that counts, but the journey. this week "lou's been thinking" about journeys and their "not so straight lines." here's author and educator, lou heckler. >> how many of you are now doing what you thought you'd be doing when you first went to work? i'll guess maybe about 25%. i was reminded of this recently when i spoke to a group of dentists about leadership. we talked about how they got into dentistry because they liked working with their hands, they liked helping people. and now? now, they also negotiate building leases, and manage staffs, and cope with shrinking reimbursements and the soft economy. my first job as a manager involved leading 17 people in a television news department. one of my old college friends surprised me by asking: how does it feel to be out of the news business? i only later realized he meant that all of us who have the privilege of leading others soon realize that leading is our job. that once-straight line we visualized where our skills were needed has zigs and zags in it. the skills we now need to learn and hone and practice have changed.
its a wonderful honor to be at the top of an organization, but the old concept of straight to the top, that's not how it is. not by a long shot. i'm lou heckler. >> susie: and we want to let viewers know, that we've posted an extended version of our conversation with "n.b.r." founding anchor paul kangas, it's on the web, at: www.nbr.com. have a great weekend everyone, and tom, it was great seeing you yesterday. >> tom: great to have you in south florida susie, goodnight susie, we'll see you online at: www.nbr.com and back here monday night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org
captioning by vitac, underwritten by fireman's fund an unprecedented surrender. the oakland police department gives up authority to a court appointed director. is it enough to avoid a federal takeover? california schools are poised for a tidal wave of money, nearly $3 billion over 5 years. to make schools greener. a bleak future for african-american school-aged boys. it's one of several alarming findings of a legislative committee study. plus, a conversation with an educaon